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Moody’s keeps key Greek rating at Caa3

Moody’s affirmed Greece’s government bond rating at Caa3 late on Friday, while the country’s sovereign outlook remained stable.

Despite the successful completion of the first review of the country’s third bailout, international rating agency Moody’s said Greece’s continued timely access to official sector funding over the remainder of the bailout program remains uncertain, “given the unpredictable nature of Greek politics, the measures still to be completed within the program, and political dynamics in the euro area. As a consequence, risks to private sector bond holders remain elevated,” it said in a statement.

“This is especially so in the context of the number of unpopular reforms required for adoption during the second review concerning product and labor market reforms and further steps towards privatization. Domestic political dynamics remain unpredictable, with the government having only a very slim majority to ensure timely passage of a range of unpopular reforms,” Moody’s warned.

The stable outlook reflected Moody’s view that risks to creditors are broadly balanced at the Caa3 rating level. “The Caa3 rating continues to incorporate a high level of implementation risk given Greece’s weak institutions, social and political fragmentation and a historically weak reform track record,” it claimed.